Mining

Coal rally may already be out of steam

22 Sep 2016

The steel-making fuel is likely to give producers like BHP Billiton and Anglo American unexpected earnings boosts but there are few reasons to believe in a lasting rally. Weak Chinese metals demand and a potential revival in domestic supply could make gains fragile for investors.

Fertilizer duo bucks trend with $36 bln love-in

12 Sep 2016

Canada's Potash and Agrium are combining in a merger of equals. It's a contrast to past industry mash-up attempts, which gave off a whiff of exuberance before collapsing. There's plenty for both sets of shareholders to like, assuming the deal clears antitrust hurdles.

China digs itself into a hole over coal

9 Sep 2016

The fuel is the big success in China's war on overcapacity. But even though production cuts have helped push prices up more than 40 pct, mines want to dig up coal faster. This and other commodity prices are in for a bumpy ride as competing interest groups resist reform.

BHP gives legal eagles lesson in accountability

31 Aug 2016

The mining giant is nixing CEO Andrew Mackenzie's bonus after last year's fatal Samarco dam collapse, days after its lawyers sidestepped blaming management. Withholding compensation is easier and may also be a faster way to persuade executives to pay attention to safety risks.

Potash giant emerges from ashes of failed deals

30 Aug 2016

Merger talks between Canada's Potash Corp and Agrium follow a string of aborted combinations dating back to Australian miner BHP Billiton's $39 bln swoop on Potash in 2010. As a commodities boom has gone bust, friendly attempts to forge a more modest merger look achievable.

Credit Suisse broking fail comes at unhelpful time

25 Aug 2016

Rio Tinto has dumped the Swiss bank from a two decade-long corporate broking role. The departure of two bankers close to the company, and an advisory mandate for rival Glencore may have been factors. Credit Suisse needs client stability after months of strategic uncertainty.

Glencore’s risk-taking culture dies hard

24 Aug 2016

The world’s third-largest mining group deserves credit for selling assets, cutting debt and managing costs, but confidence in its strategy remains fragile. A $395 million coal hedging loss isn’t encouraging. Glencore is facing a trade-off between growth and security.

BHP Billiton reaches earnings nadir

16 Aug 2016

A ray of light is appearing for the mining giant. Weak global demand and a Brazilian dam disaster were partly to blame for a record $6.4 bln full-year net loss but the worst has passed. As long as prices stabilise, cost-cutting will allow BHP to return more cash to shareholders.

Rio Tinto’s best is not yet good enough

3 Aug 2016

The Anglo-Australian miner has slashed debt but can't take its eye off the ball after posting its worst earnings in 12 years. No wonder Rio is trading at a discount to peers. New boss Jean-Sebastien Jacques is paying out dividends, but has his work cut out to win over investors.

Caterpillar gets harsh M&A lesson in Japanese

25 Jul 2016

The earth-moving giant made a badly timed push into mining with the near $9 bln takeover of Bucyrus in 2011. Now Japanese rival Komatsu has snared counterpart Joy Global for less than half that. Komatsu's longer-term view gives its dealmaking more chance of unearthing treasure.

India prizes fiscal prudence over corporate debt

23 Jun 2016

A share buyback by a state-owned miner and an auction of telecom spectrum suggests companies may have to borrow to help the government meet its deficit targets. New Delhi seems intent to meet its pledge to raise $23 billion for the state coffers - even if it upsets India Inc.

Bankers can learn from miners about culture change

15 Jun 2016

Rio Tinto, BHP and their peers have spent years improving their safety records. The finance industry can learn a thing or two from the way that miners have tried to clean up their act. Not least is the ambition to attain higher standards than absolutely required by the law.

Rio Tinto goes Genghis on the copper market

6 May 2016

By expanding its $5.3 bln Oyu Tolgoi mine in Mongolia, the miner hopes to ride an upswing in demand. Under-investment in new mines and declining quality could see the market in deficit by 2020. But there’s a risk that copper goes the way of iron ore, into a damaging supply war.

Prize diamond sales mask a less sparkly mid-market

6 May 2016

Three whopper gems will be auctioned by Sotheby’s and Christie’s, with one set to fetch $70 million. These hefty price tags give the diamond trade a misleading lustre. Slowing Chinese purchases and a supply glut mean the outlook for more mundane stones is far less dazzling.

BHP’s $44 bln Brazil lawsuit shows dangers of JVs

4 May 2016

Miners use joint ventures to get places they otherwise couldn’t. But sharing risk can go very wrong. Brazil wants to hit BHP Billiton and Vale with a huge claim for the Samarco mining disaster. It’s a bill neither can afford for a partnership neither really controlled.

Australian central bank comes to miners’ aid

3 May 2016

Cutting interest rates to an all-time low of 1.75 percent will weaken the currency and help stave off deflation. Reversing the Aussie dollar’s recent rise will help make miners Down Under more competitive. That offsets the risk of further heating up the country’s housing market.

Anglo American is winning race to cut debt pile

28 Apr 2016

The $1.5 bln the miner will raise from selling its Brazilian phosphate and niobium units is better than might have been expected. A multiple of 10 times EBITDA proves the company can still get a good price even in a downturn. Anglo is slowly but steadily sharpening its focus.

Anglo American’s pay mess is self-inflicted wound

22 Apr 2016

Over two-fifths of the mining group’s investors rejected Mark Cutifani’s pay in a non-binding vote. Anglo should be in investors’ good books: its CEO’s turnaround is working. But by offering a pay package that hedged the risk of it failing, the group shot itself in the foot.

Canada buys its way into Glencore’s sweet spot

6 Apr 2016

The Canada Pension Plan is to buy a 40 pct stake in the Swiss trader’s agricultural business. The financial returns, at first glance, look pedestrian. But the Canucks get access to Glencore’s wheeler-dealing skills, without having to share in its $26 bln group debt pile.

Rio Tinto new boss can end foolish price war

17 Mar 2016

Outgoing chief Sam Walsh cut costs and investment to leave the miner admirably lean. But he also boosted production, pushing down iron prices in the belief that rivals would go to the wall. They didn’t. His successor has a chance to copy the first strategy and ditch the second.